China's Stock Market is Crashing

Financial pundits everywhere are saying China is the future, China is where the action is, China will be the world's economic leader.

Well, hate to spoil the party, but China's stock market is crashing. If its stock market is crashing, and stock markets are leading indicators for economies, it means China is about to fall into a deep recession. Further, a huge Head & Shoulders top pattern we show below warns that if the SSEC drops below 1,750ish, China's SSEC could drop to zero, that an economic depression, economic calamity, is coming to China.

China's largest export partner is Europe, not America. With sovereign debt problems threatening the economy of Europe, with programs of spending austerity necessary and mandated, China's economy is about to take a huge hit. Europe's troubles are going to lower aggregate demand world-wide. Stock Index patterns are warning us about this coming threat.

The SSEC topped on August 4th, 2009 at 3,478.01. It fell to 2,604.19 this week, on May 12th. That is an 873 point, 25.1 percent crash in 9 months (We define a crash as a 15 percent decline, some people insist on a drop over 20 percent for a crash. This decline meets both standards). The SSEC was at 3,361.38 as recently as November 2009, and has since fallen 757 points, or 22.5 percent over the past 6 months. And so far in 2010, the SSEC has crashed 673 points from 3,277 on December 31st, 2009, or 20.5 percent.

Yet nobody is talking about this. A contagion of economic woes is starting, and will soon be manifest all across the globe. Gold sees this, and is becoming the safehaven currency for the wise, the world's reserve currency.

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